I COULD your read your post as an indication that as Saudi Arabia's oil production is in decline. Be careful how you read things. You need to look at all the facts. PE said that "prices are going up ". Well we all know that is very true. How much were you paying for a gallon of gas when Clinton was in office? Price is driven by supply AND demand. China has more than doubled their oil use in their period. Oil production has not kept up with world wide demand. Even if supply goes up but demand goes up MORE the price will not fall.

You're really deluded if you think the supply of oil has anything to do with the price...

Ever notice when something bad happens they hike up oil prices, then 2 years later they hike them up again blaming what happened 2 years ago? That's because it takes 2 years to fully refine the oil so the true effect is 2 years past. But they also use people's ignorance to hike prices when something current happens, it's all a money making scam, you're obviously the kind of guy they are betting on...

The point of my post was that pricing is more complicated than absolute scarcity vs demand. Absolute scarcity and controlled supply are not necessarily in sync. Obviously from an absolute perspective resources are finite. To argue otherwise is absurd. But a rising price does not necessarily indicate resources are running out. In the case of oil, it can simply be controlled by production.

Oil supplies are increasing because the price is finally high enough to justify going after and extracting the harder to get oil. When the price was lower we were just getting the easy stuff - low hanging fruit.

Fact, Oil is now more expensive and it is driven by supply and demand. There are many ways to manipulate both supply and demand however. OPEC tries to control supply. And there is more production in due to new techniques that were made cost effective by the high price. There was not real Tar Sand oil production in Canada until the price of oil went way up.

The price of oil is driven by much, much more than supply and demand. This was proven in 2008. Thanks to the recession, global demand in 2008 was actually down and global supply was up. Prices rose, nevertheless. Oil consumption decreased from 86.66 million barrels per day (bpd) in the fourth quarter 2007 to 85.73 million bpd in the first quarter of 2008. At the same time, supply increased from 85.49 to 86.17 million bpd.

According to the laws of supply and demand, prices should have decreased. Instead, they increased almost 25% in that time - from $87.79 to $110.21 a barrel. (Source: EIA. See Google Spreadsheet)

Commodities Trading Drove Up Oil Prices

Why? Although the EIA pinned part of the blame on volatility in Venezuela and Nigeria, it warned of an influx of investment money into commodities markets. Investors were stampeding out of the falling real estate and stock markets. Instead, they diverted their funds to oil futures. This sudden surge drove up oil prices, creating a speculative bubble. (Source: EIA Short-Term Energy Outlook)..."

Why? Although the EIA pinned part of the blame on volatility in Venezuela and Nigeria, it warned of an influx of investment money into commodities markets. Investors were stampeding out of the falling real estate and stock markets. Instead, they diverted their funds to oil futures. This sudden surge drove up oil prices, creating a speculative bubble. (Source: EIA Short-Term Energy Outlook)..."

Does not high prices paid in the Commodities market for oil futures constitute demand? I said demand NOT consumption.

Does not high prices paid in the Commodities market for oil futures constitute demand? I said demand NOT consumption.

I'm thinking about demand more from consumer point of view. I remember just before stock market collapsed, almost from everywhere (radio,tv, press) there was one message: "demand is so high and oil reserves so low that we can forget about gasoline below $5 very soon (prices in NY were over $4 close to 5 back then) what happened next we all know. Prices went down to ~$1.50 and the same "experts" were saying that in gasoline price at the gas station up to 70% is driven by speculation. Now prices are up again. I do not think anyone can believe that this is demand and supply what causes it. If real free market forces would work than we would not need all of those Bailouts to "save" the free market. And again the same experts who were so against any government market regulations since I remember, were the biggest supporters and advocates for recent Bailouts.